We're All Business Owners Now

Posted by: John Tozzi on January 08, 2010

Don’t miss this week’s magazine cover story: The Disposable Worker. It documents companies’ shift from relying on full-time employees to a contingent workforce of temps, freelancers, contractors, and part-timers. Not just in low-skill jobs or easily outsourced tasks, either. One of the people profiled is Sydney Reiner, a University of Chicago MBA who does short-term stints as an “interim chief marketing officer” for companies like Godiva Chocolate and POM Wonderful.

For employers, the shift to a contingent workforce means labor becomes a variable rather than fixed cost. For workers, it means “no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance,” particularly in low-end jobs.

Contingent workers are all, to some degree, managing their own single-person businesses. They have to worry about everything from paying taxes as freelancers to building personal brands. Many of them may have separate businesses to generate extra income: Etsy stores, handyman work, consulting. Many people even find working for themselves more secure than relying on a single employer for all their income. With 7.2 million jobs gone in the past two years, and payrolls still shrinking, it’s not hard to see why.

The shift to a temporary workforce is a long-term trend accelerated by the recession, not created by it, as my colleagues Peter Coy, Michelle Conlin, and Moira Herbst write:

Their situation isn’t likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That’s because this recession’s unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions’ influence, new management techniques, and regulatory changes—that already had been eroding workers’ economic standing.

Here’s my takeaway, in two pieces.

1) Every worker needs the capabilities of a small business owner: to find business, think and work creatively, understand and manage risks. LinkedIn founder Reid Hoffman talked about this in May: “Every individual is now an entrepreneur, whether they recognize it or not.”

2) The less-covered implication is that our institutions have not caught up to the changing labor economy. The way we prepare young people to enter the workforce — from high schools to MBA programs — should reflect how important entrepreneurship has become. Our employer-based health insurance, retirement plans, tax laws, and unemployment assistance were all built for a 20th century economy. Most people worked for big employers, and stayed in their jobs for long periods. Those days are gone, and forward-thinking policymakers need to reshape those institutions for a more entrepreneurial economy.

All that needs to happen for this shift to benefit individuals and not just corporate bottom lines. What changes would you like to see? Read the story, and let us know.

Reader Comments

Barbara Poole

January 9, 2010 05:14 PM

John - this is a terrific post and I already started reading the Business Week article online.

Carol Cross

February 10, 2010 07:34 PM

Here we go again! The "entrepreneurial economy" will be the reality --the only hope for American jobs in the 21st Century.

Big Capitalism has cleaned out the jobs in the country the last thirty years and the "entrepreneurs" can have what is left? Wall Street has taken over Main Street and because one quarter of the American people have 401's, policy must be made to protect Wall Street, first!

Those Americans who don't work for the big corporations ( soon, 75% of Americans) will have to compete with other individuals and the big multinational corporations and big and little box retail corporations and big brand franchisors to create their own jobs, or live on the streets?

The 20th Century economy is gone, that is, when "Most People worked for big employers, and stayed in their jobs for long periods" and had health insurance and retirement benefits, etc.. Is that because our Amercian Corporations left the country for the cheap labor available in other nations and our trade deficit worsened every year.

This is what the "global economy" and the concentration of wealth in multi-national global corporations has brought to the American people? Money has no borders any more and the jobs for the masses are not the concern of the soverign nations. Are the sovereigns busy fighting for survival of their financial markets and their currency in the big Casino of the global economy where maximization of profits for those on top of the financial pyramids is the goal.

Why doesn't Business Week tell us who it is that really benefits from the global economy? Why doesn't Business Week tell the people how to get the attention of "forward-thinking policymakers" who have contibuted to the mess we face today.

These "forward-thinking policymakers" appear to be thinking only about the next election and again providing "short term" solutions based on faulty statistics concerning small business startups that will supposedly revive the economy. Apparently, we can continue to create bubbles as long as the pipe and the soap remains in good supply.

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About

What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.